Death and Taxes: The Tax Effective Estate Plan – a recorded online conference

Session 1: The Deceased Estate: Who Pays the Tax?

During the stages of administration of a deceased estate, a beneficiary may become presently entitled to the income. It is important to recognize this to determine who is responsible for the payment of income tax on that income. This session covers the various stages of administration, including:

• Can a beneficiary be presently entitled to estate income prior to the estate being fully administered?
• What if payments of income are paid to the beneficiaries whilst the estate is in administration?
• When is a deceased estate fully administered?
• Does the estate have to be wound up for beneficiaries to be presently entitled to the income?
• How is the income of a deceased estate taxed in the financial year it is fully administered (IT 2622)?
• Deceased estates and CGT assets (TR 2004/D25):
  • when does a beneficiary have absolute entitlement?
  • CGT event E5 and the Division 128 exclusion
  • the fungible asset test
  • worked examples
• The taxing of a deceased estate:
  • for the first three income years after death
  • more than three years after death

Session 2: Tax Effective Dealing of Superannuation on Death of a Member as Part of the Estate Plan

As superannuation is increasingly becoming a substantial amount of a person’s net worth, it is important that it be given a high priority in the estate planning process. This session examines the key issues, with a focus on the tax effective use of superannuation proceeds trusts. It covers:

• The tax consequences of paying out superannuation (dependants/non dependants)
• When is it beneficial to consider a superannuation proceeds trust?
• Does it matter if superannuation proceeds go via the deceased estate to a superannuation proceeds trust under a will or direct from a superannuation fund?
• What are the tax benefits?
• Have the changes in section 102AG ITAA 1936 had an effect on superannuation proceeds trusts?
• Does it make a difference if the death benefit is coming from an SMSF or an industry fund?
• How does the binding death benefit nomination fit in if the intention is to set up a superannuation proceeds trust?
• Case studies

Session 3: The Tax Consequences for the Family Home After Death

For many deceased estates, the major asset is the deceased’s main residence, being a CGT asset with a difference due to the various emotions and memories that may be attached. Determining whether there are any tax consequences for this asset will depend on a number of variables, which this session explores, including:

• Does the history of use of a main residence matter?
• How the CGT main residence rules interact with:
  • section 118-145 ITAA 1997, if main residence use ceases pre death
  • moving into an aged care facility pre death and maintaining home ownership
• the two year rule, including:
  • the relevant dates to use
  • when the period may be extended
• How the CGT cost base rules apply to a main residence, including:
  • the situations where historical ongoing ownership costs may be required
• Why the residency status of the deceased matters
• When the will grants a beneficiary a right to reside
• Applying the rules for a main residence on land in excess of two hectares
• Practical examples of CGT implications based on the various usage of a main residence post death